Standing Committee B

[Mr. John McWilliam in the Chair]

Proceeds of Crime Bill

John McWilliam: Good afternoon. Hon. Members may remove their jackets if it makes them more comfortable. Clause 64 Management receivers: discharge

Clause 64 - Management receivers: discharge

Amendment made: No. 49, in page 41, line 7, at end add— 
 `(5) If this section applies the court may make such a consequential or incidental order as it believes is appropriate.'—[Mr. Bob Ainsworth.]
 Clause 64, as amended, ordered to stand part of the Bill.

Clause 65 - Appeal to Court of Appeal

Question proposed, That the clause stand part of the Bill. 
Mr. Dominic Grieve (Beaconsfield) rose—

John McWilliam: Before I call the hon. Gentleman to speak, I shall pass on a plea from the Committee Reporters. The Committee's proceedings are recorded via the microphones so that they can be reported, so could hon. Members please try to speak towards the microphones? That way, the Reporters might hear what is said.

Dominic Grieve: In fact, having looked more closely at the clause, I need not trouble the Minister any further on it. The wording was slightly different, but I assume that the expression used in subsection (4)(b),
``any person affected by the order'', 
refers to the defendant.

Bob Ainsworth: I am not sure that the phrase refers only to the defendant.

Dominic Grieve: But does it include the defendant?

Bob Ainsworth: Yes.
 Question put and agreed to. 
 Clause 65 ordered to stand part of the Bill. 
 Clauses 66 to 68 ordered to stand part of the Bill.

Clause 69 - Powers of court and receiver

Dominic Grieve: I beg to move amendment No. 136, in page 43, line 39, at end insert—
`(bb) must be exercised, in a case where a confiscation order has not been made, with a view to minimising so far as is reasonable and subject to the provisions of paragraph (b) any impact on the existing financial arrangements of the defendant.'.
 We touched on this question before lunch, but we now have the opportunity to have a fuller debate on the point, which causes me considerable concern. The Under-Secretary now has the opportunity to set out how he thinks the regime will operate in practice. He might consider citing examples, if he can, of how he expects receivership to work. The issue is difficult, but the Committee must grapple with it. 
 In subsection (2) the receiver's powers are defined, and I do not take exception to the way in which those powers are set out. He must exercise his powers 
``with a view to the value for the time being of realisable property being made available . . . for satisfying any confiscation order that has been or may be made against the defendant'' 
and, 
``in a case where a confiscation order has not been made, with a view to securing that there is no diminution in the value of realisable property''. 
That makes perfect sense. The powers must also 
``be exercised without taking account of any obligation of the defendant or a recipient of a tainted gift if the obligation conflicts with the object of satisfying any confiscation order that has been or may be made against the defendant''. 
That is, perhaps, slightly more problematical. Finally, the powers 
``may be exercised in respect of a debt owed by the Crown.'' 
I have tabled an amendment that states that the powers 
``must be exercised, in a case where a confiscation order has not been made, with a view to minimising so far is reasonable and subject to the provisions of paragraph (b) any impact on the existing financial arrangements of the defendant.'' 
I am making an important point. The period of receivership before confiscation takes place may last for a considerable time. It is difficult to make an estimate, but if we consider the time that it sometimes takes for a major case to come to trial, there could be nine to 12 months between the date on which original restraint order was made and the date on which a trial takes place. Depending on the nature of the case and the complexity of the trial, that could be extended to 18 months or two years. Despite the fact that courts try to bring cases to trial as quickly as possible, I know from experience that there may be occasions when the defence asks legitimately for several adjournments, and finding a trial date for a matter that may last several months—in the case of drug trafficking proceedings or a conspiracy, for example—can take a considerable time. 
 During that time, the receiver has the task of looking after complex property issues with a view to securing that there is no diminution in the value of the realisable property. However, nothing is said about what the receiver should be doing in terms of managing the property so that it can be returned, if necessary, in a state at least partially recognisable as what it was previously to the defendant, if he is acquitted and no confiscation order is secured. I shall cite some obvious examples. As the rules stand, if a house were the subject of a restraint order it could be sold and the proceeds put into a bank account. It is all very well saying that the money could ultimately be paid back to the person concerned if he were acquitted, but the money and the house are not the same. 
 The house might be a property to which the person was particularly attached, because it had been in his family for generations, yet he might not necessarily recover it even if he were acquitted. Moreover, he will not have any formal means of redress or complaint about such action, save under the serious default provisions, which we shall examine later. The items may be chattels, although the receiver would have little reason to sell them unless he felt that their property value was declining rapidly and he had to secure it. 
 The property may be a business, and the question of whether it could be managed over the period is difficult. I am anxious about the rules because they do not even attempt to recognise the catastrophic consequences for an individual of being put through such a process. His assets are placed under restraint, but even on being exonerated he will recover only a pale shadow of what they were when they were seized—not necessarily in value, but practically, and in terms of how they were to sustain him and his family for the future. My amendment does not contain the best wording, but it concentrates on something that the Government should consider carefully. 
 We are dealing not with a bankrupt, but with an individual against whom nothing has been proved. He may be wealthy—although the amount of wealth is perhaps irrelevant. Arguably, a person with huge wealth might be less affected, because at least the huge wealth would be given back to him and he could start again. However, a person with moderate wealth, perhaps with a small business, may be completely ruined by the consequences of a restraint order. 
 As I said to the Minister, this is linked to compensation. If within the Bill there were a formula for compensation that included taking account of, for instance, economic loss—I put that at its absolute highest—I would not worry about the existing provisions under clause 69. On the face of it, that would be of little consequence. Understandably, however, there will not be provision for a compensation formula that covers every aspect of a person's loss if a restraint order is made and he subsequently receives back much less than the package that he put in. We ought to spell out what the receiver should be doing. 
 I accept the possibility of returning to the court for guidelines or directions, but the receiver's discretion is particularly wide. The clause is worrying. In the past—as I think the Minister will agree—similar powers have existed in respect of confiscation orders and the surrounding restraint orders. The hon. Gentleman may tell me that I am wrong about that, but I expect them to be similar. They were, however, being targeted at a much smaller area. We are now extending those powers widely. Far more people will, we hope, be caught in the net. Equally, the risk of not proving the criminal lifestyle and the other things that would lead to confiscation may be greater. I am eager to hear what the Minister has to say, but this is a serious issue and I am worried about how the restraint provisions will work in practice.

John McWilliam: Before I propose the amendment formally, I must tell hon. Members that there is a possibility of a Division. If that happens, I will suspend the sitting for 15 minutes. If we continue until the end of business in the House, there is a possibility of two Divisions, and in that case I shall suspend the sitting for half an hour.

Mark Field: I support the amendment so eloquently moved by my hon. Friend the Member for Beaconsfield (Mr. Grieve). It is incumbent upon the Government at this juncture either to draw up some detailed guidelines, or at least provide some guidance from the Minister as to an effective compensation programme for those who would otherwise lose out as a result of the provisions and extensive powers of the court and the receiver. In particular, there needs to be some consideration about effective—as opposed to simply the legal minimum—compensation for those who are found innocent in the longer term.
 As my hon. Friend rightly pointed out, such new and extensive powers could affect the innocent, not just the guilty. As has rightly been said, they go considerably beyond any other similar set-up, although, as I said earlier, there is at least some analogy with insolvency provisions. Clearly, however, we are not talking about an insolvency case, but about someone who may be innocent. 
 I have two worries. The first is in relation to the general rule that economic loss is not usually considered. A possible scenario is that over a period of two or three years—following the restraint order coming into place and while the investigation carries on, leading finally to acquittal—an individual's business may be entirely ruined. The goodwill is lost, and the person is in no fit state, mentally or physically, to carry on the business. As such, he finds himself at a massive loss. Indeed, assets that are restrained and subsequently sold off may be somewhat undervalued. I appreciate that it is extremely difficult to quantify the exact value. However, surely it is incumbent on any governing body or authority to give us guidelines to ensure that there is effective and correct compensation. 
 A second aspect worries me deeply, because I have never supported this country's signing up to the European convention on human rights. However, our nation could encounter great problems as a result of a claim under that convention by an individual who felt that his rights were being infringed, not least by a long-standing case that had resulted in neither conviction nor acquittal—or, indeed, by a fully-fledged acquittal. 
 This is in part a probing amendment, and I would be interested to know about the thought mechanism behind it. The procedure is new, so we need the Minister to say more than, ``Well, there are legal guidelines in place for existing procedures,'' because this procedure goes more than a few steps further forward. It would be difficult to draw up subsections on the hoof, but I would like to know what the Government are thinking both specifically about clause 69, and about such cases in general, because I suspect that such a procedure will appear in many future Acts dealing with the proceeds of crime or other criminality.

Bob Ainsworth: I recognise the worries of the hon. Members for Beaconsfield and for Cities of London and Westminster (Mr. Field), which are wrapped up with concerns about compensation. Both hon. Gentlemen are right to say that some of the provisions are new, although some are based on existing legislation. The hon. Member for Beaconsfield said that the provisions were wider. That point has been made in other contexts, and I understand why he made it. The provisions in subsections (2)(b), (3)(c) and (4) are not in existing legislation.
 I will address the amendment, although I know that some of the concerns of the hon. Member for Beaconsfield arise in connection with compensation. The amendment would spell out explicitly that a person exercising pre-emptive restraint and management receivership powers must exercise them so as to interfere as little as possible with the existing financial arrangements of the defendant. The amendment would state explicitly how we would expect the powers to be exercised, and, indeed, how they have been exercised in practice for many years. 
 The amendment is unnecessary. It also creates a problem because the legislative steer in clause 69 applies both to realisable property held by the defendant and to realisable property held by the recipient of a tainted gift. The hon. Member for Beaconsfield would not necessarily want the defendant's interests to be paramount in the same way as those of the holder of a tainted gift whose property has been seized. 
 The exercise of the restraint and receivership powers is discretionary. The Bill enables any person who believes that the powers of restraint or receivership are exercised inappropriately to apply for a variation of the relevant order, and there is an appeal to the Court of Appeal against refusal to vary that request. 
 I must point out the consequences of some additions to the legislation. Subsection (3)(c) and subsection (4) enable the defendant or the recipient of a tainted gift to challenge the management receiver's decision to dispose of a particular asset on the grounds that it is irreplaceable. The provisions have regard to the fact that the defendant has not been convicted at that stage, so he should not be obliged to lose irreplaceable assets. 
 The management receiver will be obliged to manage the business under his control in the best interests of the financial well-being of that business. However, there may be parts of, or assets in, that business that are of special interest to the owner, which, if a hard-headed business look were taken at the matter, should be disposed of. If we had seized the assets of the hon. Member for Henley (Mr. Johnson), the management receiver might decide that it would be better to sell The Spectator.

Boris Johnson: Priceless.

Bob Ainsworth: Despite the fact that that may be the financially sensible thing to do, the hon. Gentleman might be utterly opposed to such a move, and he should be allowed to go to court to ensure that it did not happen.

Boris Johnson: I must, of course, set the Committee's mind to rest. If, in the unhappy event of my being convicted of a crime, the director were to seize The Spectator, that would to some extent prove the point that Opposition Members have been making. Although The Spectator may be connected with me and my conduct, it is in no sense my property. It is the property of Conrad Black, so selling it would be a grievous injustice. Were the director to place a restraint order on the conduct of The Spectator, that would prove even more of the eloquent criticisms that have been made. I hope that the Minister will take that as an example of exactly the way in which the Bill could go wrong.

Bob Ainsworth: I sort of knew that the hon. Gentleman did not own The Spectator, but I thought that he should be drawn into our conversation and involved a little more in our proceedings.
 I understand the anxieties of the hon. Member for Beaconsfield about compensation, and we shall discuss some of the issues involved later. Using restraint early will be absolutely necessary if we are to be effective, because of the possibility of dissipation. We run the risk of placing too many hurdles in the way of its use, and thus of ensuring that it is not used. That must be borne in mind, too. 
 The management receiver will have responsibility for taking care of the assets that have been transferred to him. Admittedly it is possible that he will not manage them as effectively as the original owner would have done, resulting in a loss. The original owner may subsequently be acquitted of the charges against him and feel that the loss is unjust. However, the managing receiver may manage affairs in a way that realises a lot more gain than the owner would ever have received. That gain would go to the owner on acquittal. We are discussing criminal proceedings. I understand the point that the hon. Member for Beaconsfield makes, but we must keep in mind the necessity for the measures in the Bill to be effective.

Dominic Grieve: Taking the Minister back to the point about the receiver—I do not say this with tongue in cheek—we know that the receiver will be entitled to draw down assets in order to pay himself. That raises the interesting question of what happens when the amount that the receiver claims out of the business is what tips the balance between whether the business should be liquidated or continued. Is that not one reason why the suggestion in my amendment might be beneficial?

Bob Ainsworth: The amendment would not make any difference to the current arrangements; it merely points out the manner in which the receiver must manage the assets.
 There is a problem with the amendment, as I have pointed out to the hon. Gentleman: it refers to the defendant, but not to the recipient of the tainted gift. It does not do what he claims; it does not remove the receiver's management costs from the issue. We might have to discuss that matter when, in connection with the provisions for compensation, we debate whether the threshold is too high. 
 I understand that the hon. Gentleman is flagging up an issue that he has broader concerns about, but the amendment would not, of itself, make any difference to the treatment of the defendant's property.

Mark Field: I thank the Minister for alerting us to the purpose of subsection (4). His comments have provided some comfort. However, in practical terms, what is deemed to be impossible to replace might be a possession that has personal significance, such as a house that has been owned by the family for several generations, or works of art, or antiques. That is another reason why, in compensation for a receiver's fees, property that can be easily liquidated, such as moneys that are available within a business, or small bits of a business that can be readily sold off, will be targeted first. That calls to mind a point that my hon. Friend the Member for Beaconsfield made a few moments ago—

John McWilliam: Order. This is a lengthy intervention, and it is not relevant to the amendment.

Mark Field: I was responding not only to the amendment but to the Minister's comments, Mr. McWilliam.

John McWilliam: Order. We are dealing with the amendment.

Bob Ainsworth: The hon. Gentleman overlooks subsection (3)(c), which says:
``in a case where a confiscation order has not been made against the defendant, property must not be sold if the court so orders under subsection (4).'' 
If a house has been owned by the family for generations—or the item might perhaps be a work of art, a racehorse or whatever—the defendant will tell the court that he does not want the receiver to be allowed to dispose of that property. He will make his case, the court will instruct the receivers not to dispose of that property, and they will not be allowed to do so. Subsequently, when a confiscation order is made, the property will cease to belong to the defendant; it will become the property of the state, and the receiver will dispose of it as he deems fit, on behalf of the citizen.

Dominic Grieve: I take on board the Minister's point about subsection (4), and I was aware of its existence when I drafted the amendment. However, it seemed to me that the question of what is irreplaceable raises some interesting issues. I appreciate that the Mona Lisa might be irreplaceable, but I do not think that a house or a business is irreplaceable, which is why I tabled the amendment. If the Minister's advice suggests that I am wrong about that, I would be grateful to hear his explanation, as that would helpful to the Committee.

Bob Ainsworth: Let me try to help the hon. Gentleman. As I interpret the Bill, we are not talking about Mona Lisas, or anything else that someone else believes is irreplaceable; we are talking about something that the defendant believes is irreplaceable, because it has sentimental value or whatever. If that interpretation is wrong, I will inform the hon. Gentleman, because I do not believe that, prior to conviction, that sort of action should be allowed.

Dominic Grieve: The end of this discussion has been particularly helpful, and I am grateful to the Minister for those last comments. We have reached the point where at least counsel acting for a defendant in such circumstances might be well advised, if there is a subsequent problem, to refer to the Hansard record of the Committee, to which reference can now be made during the course of court proceedings—that has been the case for some time—and read what the Minister has said. As I said to him, this goes beyond the Mona Lisa, castles and antique chattels that are not readily replaceable with equivalents.
 There is also the question of the maintenance of a defendant's basic financial structure under a restraint order. I am reassured by the Minister's comments, although with subsection (2), one could spell out the principles. As the Minister has helpfully spelled out principles that are in accordance with the amendment that I drafted, and as those principles could now be referred to, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 69 ordered to stand part of the Bill.

Clause 70 - Committal by magistrates' court

Dominic Grieve: I beg to move amendment No. 137, in page 44, line 18, after `offence', insert
`punishable by a term of imprisonment or a fine of level 2 or above on the standard scale.'.
 We touched on this subject in an earlier sitting, when we discussed what constituted a ``criminal lifestyle'', issues to do with ``general conduct'', and the powers under clause 6. That seems a long time ago. 
 Clause 6(2) states the conditions that a defendant must satisfy if the Crown court is to proceed. As matters stand, the prosecutor has the discretion to request the magistrates court to commit a defendant to the Crown court with a view to making a confiscation order. He has entire and complete discretion, and the purpose of the amendment is to fetter that discretion. 
 I drafted the amendment to try to reduce to what I regard as a minimum the sorts of offence that would not fall under the discretion of the prosecutor. The offence should be 
`punishable by a term of imprisonment or a fine of level 2 or above on the standard scale.'. 
Level 2 is the second lowest level of fine available to a court; the scale does not go in reverse order. I do not want a long repetition of our arguments about clause 6, but I suggested the amendment because it would ensure that offences dealt with by the magistrates court that were of little consequence did not lead to an invocation of the procedure. I suspect that that is most unlikely to happen in practice, anyway. 
 As we discussed earlier, I have concerns about the extent of the powers and whether they will bite on those who have committed offences that most people would regard as minor. I am aware of the Minister's point about what I call the Al Capone clauses—despite my French background, it was the hon. Member for Glasgow, Pollok (Mr. Davidson) who pointed out that it is pronounced Al Capone. They provide the Government and the law enforcement agencies with a useful tool for taking assets from someone who has committed a minor offence. None the less, I am concerned about the issue and I think that we should be realistic about it. 
 As we are casting our net so wide, I question whether it should be at the discretion of the prosecutor to decide whether every category of offence for gain could lead to committal to the Crown court for confiscation proceedings. We can, without changing the criterion of ``criminal lifestyle'', ensure that those who are convicted of minor matters in magistrates courts are not committed to the Crown court on the prosecutor's whim.

Bob Ainsworth: The hon. Gentleman is right to say that we have had this conversation before. The amendment would prevent the prosecutor from having a case referred to the Crown court for confiscation unless the offence attracted a penalty of imprisonment or a fine at level 2 or above on the standard scale. The Committee will recall that the Government consider it a point of principle that confiscation should be available after conviction for any offence. We do not want to chase small amounts of money around, but as I have tried to indicate to the Committee, it is not necessarily the scale of the crime that dictates the level of profit that has been made as a result.
 The main advantage of providing a threshold is that we would target more serious criminals. The main worry, however, is that we would provide a loophole through which those serious criminals would be only too clever, and only too quick, to climb. The clause is intended as a catch-all provision to ensure that any case that a magistrates court may not be sending to a Crown court can be sent there anyway, for confiscation to be considered. The amendment would restrict the circumstances under which that could be done. I ask hon. Members not to go down that route, for the reasons that I have just given, and for the reasons that I gave before. We could not do that without providing loopholes, and the amount of remuneration is not in any way aligned to the seriousness of the offence.

Dominic Grieve: As the Minister will be aware, I have tried to approach the matter at this stage of the Committee's discussion differently from the way in which it was approached when we discussed clause 6. Under clause 6, we considered it in relation to magistrates court convictions or either-way offences. As the Minister will appreciate, I have attempted, having taken on board the comments about the Government's issues of principle, to try to find a common meeting point.
 I appreciated the Minister's point about either-way or summary offences only, which is why, as I hope he will understand, I came up with this formula. Essentially, the people who would escape would be individuals who had committed offences that attract penalties at level 1 on the standard scale. I seem to recollect—perhaps I will be corrected—that level 1 on a standard scale is £100. We are therefore considering offences that attract fines of up to £100—a category consisting of what I would describe as small-scale administrative offences. I would have thought that that would be a better cut-off point than providing a completely unfettered power. 
 Ultimately, I suppose that this is an issue of principle. The Minister has fairly put the Government's point, which is that anyone in this country who commits a criminal offence should enter a parallel world in which all sorts of unpleasant things can be done to them. I dare say that the Minister regards that as socially desirable for the prevention of crime. However, the alternative way of looking at it is that we are giving considerable powers to law enforcement agencies, which are extensive, novel to a certain extent, and an infringement of some of the usual rules that have been applied to criminal justice in this country hitherto. That is especially so, as I shall remind the Minister, because later in the Bill a completely different regime is introduced, which allows somebody who has never been convicted of an offence to have proceedings brought against him for the confiscation of his assets under a civil recovery system. This is therefore not an ``all or nothing'' situation. The issue is the extent to which somebody who has a minor conviction or a series of minor convictions that attracted three penalties of £100 might be subject to that process. In those circumstances, it is right that the line is drawn somewhere, because otherwise, I fear that there might be a public perception that in an effort to fight crime, we were producing injustice. It is difficult to know where the line should be drawn.

Stephen McCabe: I do not want to go back over old ground, but is the hon. Gentleman seriously telling us that if two individuals are suspected of hoarding ill-gotten gains, we should have the right to pursue the individual who commits a crime subject to level 2 punishment, but not the individual whose offence attracts a level 1 punishment?

Dominic Grieve: No, I am not. As I have already said, the novel aspect of the new regime being introduced by the Government is that civil proceedings can be brought against a person who has never had a criminal conviction. I do not think that I had better ask for confessions in Committee, especially from those of us who drive motor vehicles. Despite many years of driving, I am in the fortunate position—touch wood—of not having any criminal convictions in relation to that. However, if I asked for confessional statements from members of the Committee, some might fall within the category of having a previous criminal conviction. Furthermore, some members of the Committee might even fall within the category of appearing to have a criminal lifestyle. Criminal lifestyle is based on convictions for gain and people benefiting from certain conduct. It you drive without a light on the back of your car, it could be argued that you have benefited from the fact that you did not replace the bulb.

John McWilliam: Order. My car has a clever device that tells me what is happening to the light. Moreover, the hon. Gentleman is inadvertently steering dangerously close to calling the honour of members of the Committee into question. He must not do that.

Dominic Grieve: I was certainly not calling the honour of other hon. Members into question, Mr. McWilliam. The idea that they may have speeding convictions does not touch on their honour; it may just be a fact of life.

John McWilliam: Order. I was worried not about the speeding convictions but about the fact that some members of the Committee may have a criminal lifestyle.

Dominic Grieve: I do not wish to stray too far from our topic, Mr. McWilliam, but I am not the person who has to define a ``criminal lifestyle''. When we debated the matter, I said to the Minister that it was an unhappy phrase and could sensibly be replaced with different phraseology. I am still waiting with bated breath to hear what he has to say about that.

Bob Ainsworth: As the hon. Gentleman will recall, the responsibility was not left with me alone.

Dominic Grieve: The Minister is right. I am still thinking about the problem, and will discuss it further with my hon. Friends.
 The criminal lifestyle provisions could cover someone who has a conviction for not having a rear light on his vehicle. Where should the line be drawn? Should it be said that any criminal offence makes it possible for someone to be committed by a magistrates court at the request of the prosecutor, or should a slightly higher test be imposed to exclude matters in respect of which such action might be considered unfair?

Bob Ainsworth: The hon. Gentleman has come pretty close to saying that in practice such issues will not arise. In the main, we are having an academic argument. He has not dealt with what I said about the potential for creating loopholes that neither he nor I want to create.

Dominic Grieve: I appreciate the Minister's point, but would we be creating loopholes? If he were not including the civil recovery provisions in the Bill, I would accept his case. If we did not have those, the only way to recover assets from people believed to be criminals would be if they fell into the ``criminal lifestyle'' category. The Minister would then have a more compelling argument that every category of criminal offence, however small, should be a trigger either to committal by the magistrates court or for an assessment of criminal lifestyle when the case reaches the Crown court.
 I accept that. It would be a powerful argument. However, that is not the position because the Government have chosen to offer an alternative avenue. One must consider the difference between the two avenues. The civil recovery procedure—it works only on the balance of probabilities, although we will examine that in due course—involves an ordinary civil action with the burden of proof placed on the director or other person who brings the application to prove the case against the individual. However, under confiscation provisions, the burden of proof is reversed. It is as simple as that. Because of the reversal of the burden of proof, we have a draconian sanction. The underlying justification for that, which the Minister half accepted, because he said that the matter would not arise in some cases, is that such a person is already deeply tainted with criminality. 
 I am trying to highlight individuals. I pick up your point, Mr. McWilliam, about casting aspersions on the honour of hon. Gentlemen—

Helen Clark: And ladies.

Dominic Grieve: And ladies—I meant aspersions on hon. Members.
 There are some transgressions in everyday life about which those of us who have not experienced them may say, ``There but for the grace of God go I,'' and count ourselves fortunate. We may not believe that, following such transgressions, a person is tainted with criminality as a result. However, because of the Bill, such people could fall foul of draconian provisions. In such circumstances, we would rely on the benevolence of prosecutors—and perhaps ultimately the state. 
 In connection with the Bill and other legislation, we are told that people who have done nothing wrong have nothing to fear. However, I cannot guarantee that the Minister will be in office for ever, that the present Lord Chancellor will personally hold his office for ever, or that the Labour party will be in political office for ever. We cannot see into the future, but naturally, I hope that when the Conservative party returns to office, we will have standards of fairness and probity equal to the Government's. I dare say that the Minister would almost acknowledge that that would be the case. 
 We cannot see into the future, and we are giving powers that could be exploited by those who wish to abuse them. That is the justification for the amendment. I do not wish to take more of the Committee's time on this matter, but it is fundamental. The Minister stated his case, and I can only state mine. I must press the amendment to the vote. 
 Question put, That the amendment be made:—
The Committee divided: Ayes 5, Noes 12.

Question accordingly negatived. 
 Committee suspended for a Division in the House. 
 On resuming— 
 Clauses 70 and 71 ordered to stand part of the Bill.

Clause 72 - Serious default

Dominic Grieve: I beg to move amendment No. 138, in page 45, line 23, leave out `serious'.

John McWilliam: With this we may discuss amendment No. 139, in page 45, line 29, leave out `serious'.

Dominic Grieve: We now come to the important matter of serious default and compensation. The clause provides for circumstances in which compensation may be paid to the subject of a criminal investigation—when proceedings have not been completed, and there has therefore been no conviction—who has incurred a loss in respect of the confiscation and restraint procedure. It applies equally to confiscation and restraint, when either has taken place and subsequently been quashed. It covers both those contingencies.
 In effect, the only redress available, in terms of compensation, is in a case of serious default by one of the named people under subsection (9). That covers the actions of a member of the police force, the Crown Prosecution Service or the Serious Fraud Office, Customs and Excise and of the commissioners of the Inland Revenue. I am not sure where the director comes in. The Minister may be able to tell me whether the director is intended to fall within one of those categories. In a number of the activities that might lead to compensation being claimed, the actions of the director or his financial investigators might be relevant. I look forward to the hon. Gentleman's explanation of how the compensation clauses will work. 
 There is a sense that we are discussing only serious default by the prosecutors, not serious default by those who have brought about the restraining or confiscation orders. That is the point that I wish to explore during the debate. I am conscious, Mr McWilliam, that I may be straying from the precise amendments into a clause stand part debate, and I have no objection to trying to roll the two together. The issues are extremely wide.

John McWilliam: I agree with the hon. Gentleman. I am willing to be relaxed about that. It is difficult to extricate the particular amendments from the clause.

Dominic Grieve: On the face of it, it is unlikely that I would vote against clause 72. However, if there were no meeting of minds at the end of our debate, we would—leaving aside for a moment my amendments, which might be voted on—want to return to the issue on Report because it is of considerable importance.
 I am looking forward to the Minister's explanation of the provisions. Are we talking about compensation only in cases when the prosecution has been improperly investigated and conducted, or also when the confiscation and restraint procedures have not been properly conducted? I accept that the one is, in a sense, rolled into the other. If somebody is to be eligible for compensation, it must be found that their criminal lifestyle or criminal conduct should not have led to a confiscation, but that is not the same thing as their being acquitted of the offence, which is why I am unclear about who falls within the category of being capable of committing a serious default. 
 I am assuming, for the moment, that we are covering a wide category of individuals, and that confiscation procedures and restraint procedures would be covered. If that is the case, does the use of the term ``serious default'' create far too defensive a criterion from the point of view of the investigators and prosecutors? I accept that if somebody ends up without a confiscation order, his assets will be returned to him, but—as the Minister acknowledged in an earlier debate—that will not necessarily compensate him for the financial disaster that might have overtaken his businesses when they were out of his hands. 
 Another issue must therefore be addressed. What sort of compensation are we talking about? It is described, in wide terms, as such compensation as the court believes is just; I assume that that definition is broad enough to extend to economic loss. Will the Minister clarify whether he considers that to be the case?

Norman Baker: Subsection (6) refers to ``realisable property''. I am concerned that that term might limit the definition of the circumstances under which compensation might be payable. For instance, is it not possible that someone could suffer a loss of status or stature—or economic loss, as the hon. Member for Beaconsfield said—and that that would not be covered by the definition?

John McWilliam: It might be helpful if I clarify the ruling that I gave. If I took the amendments as they stand, the debate would be narrow; the Committee would discuss only what is ``serious default'' and what is not. It seems to me that the Committee wishes to debate the matter more widely and, therefore, the hon. Gentleman's intervention is in order—although if I had not made that ruling, it would not have been.

Dominic Grieve: I agree with the comments of the hon. Member for Lewes (Norman Baker). However, although the reference is to anyone who holds ``realisable property'', I would expect that term to be applied broadly. I also have to say, in fairness to the Government, that compensation for loss of status would take us into very difficult areas. A person who is prosecuted and acquitted is supposed to have had his status restored by the acquittal. Whether that always happens in reality is a moot point, but things become difficult if one starts to go further than that, by saying that, because somebody has had their name plastered all over the newspapers—for instance, a murder allegation might have been made against him—he should be compensated if he is acquitted.

Norman Baker: I raise the issue because, if someone is wrongfully arrested, they can sue. Perhaps the Bill contains a mechanism that I am unaware of, but I am unsure whether the same sort of options are available to people who are subject to confiscation procedures that are similarly erroneously pursued.

John McWilliam: I am unsure whether the hon. Gentleman is asking the question of the correct member of the Committee, although, no doubt, that member will get a chance to respond.

Dominic Grieve: I take on board the argument of the hon. Member for Lewes. I do not wish to take up too much time, however, and I would like to hear from the Minister so that we can, perhaps, move to a wider discussion.

Mark Field: The question that I wish to ask my hon. Friend addresses some of the key aspects of the Bill. If people are to be innocent until proven guilty, their status may be diminished, but that is the price that you pay under the burden of proof. I wonder whether my hon. Friend has any comment to make about the reversal of the burden of proof, which may open the floodgates for compensation-related claims for serious or other defaults.

John McWilliam: Order. I caution the hon. Gentleman that he is using the word ``you'' rather loosely.

Dominic Grieve: I accept my hon. Friend's argument. Under the old criminal justice system, you were prosecuted and found either guilty or not guilty.

John McWilliam: Order. I am not being prosecuted.

Dominic Grieve: On a point of order, Mr. McWilliam. I hope that you will excuse me, but my use of the word ``you'' was rhetorical. I did not think that it would offend the rules of the House. If it does, I shall have to substitute it with the word ``one'', which is rather archaic.

John McWilliam: Order. The hon. Gentleman is right. The word ``one'' is archaic, but those are the rules of the House.

Dominic Grieve: So be it.
 A parallel system operates within the system. It is possible for someone to be convicted of an offence but not be subject to the confiscation procedures. It is also possible for someone to have a number of convictions but not be deemed to have a criminal lifestyle. My hon. Friend the Member for Cities of London and Westminster and the hon. Member for Lewes are right. The compensation procedures appear to be opaque, but it is not clear which system they will bite.

Paul Stinchcombe: Through his amendment, the hon. Gentleman attacks the level, not the type, of default. If he accepts that the right types of default are contained in the clause, does he accept that in subsection (9) we must identify all the relevant parties?

Dominic Grieve: I am not sure that I agree. Subsection (4) mentions that the second condition is:
``in the criminal investigation there has been a serious default by a person mentioned in subsection (9)'' 
I accept that a criminal investigation cannot be ordered by the financial investigator.

Paul Stinchcombe: Or by the director.

Dominic Grieve: Yes. However, the oddity of the clause, which perhaps the Minister can explain, is that it leaves up in the air the question of what role the financial investigator and the director have in the criminal investigation. It is possible for someone to be prosecuted but not be subject to a confiscation procedure.
 We heard earlier that the financial investigator seems to have some relation to the investigation because of the authorisation that he is given by a court, a police superintendent or some other person. When I first read the clause, I assumed that the financial investigator was a cog in the criminal investigation and so thought it possible that he was included under subsection (9) in that role. I may be wrong. That is why I wanted clarification about the financial investigator's status.

Paul Stinchcombe: At the outset of the hon. Gentleman's remarks, he asked why the director was not included in subsection (9). Does he agree that the director cannot be responsible for any of the people mentioned in the three conditions?

Dominic Grieve: I accept that the director cannot be responsible for defaults in criminal investigations because he does not conduct them. The clause is about the confiscation of assets, which includes the steps taken in a criminal investigation to restrain assets. Confiscation takes place after conviction, so an overturned conviction is likely to lead to compensation for the consequences of confiscation. One can foresee a situation—not covered by the clause—in which a default takes place during the restraint process and the defendant is acquitted. In such a case, is compensation catered for? I am uncertain about that.

Paul Stinchcombe: I wonder whether we are getting closer to the issue. The hon. Gentleman is trying to attack not the threshold of default but the types of default that he says should be contained in the clause.

Dominic Grieve: The hon. Gentleman is right that I am concerned about the types of default, but I am also concerned about the threshold. I tabled an amendment to delete the word ``serious'' so that we could consider that. He is right that the test in a criminal investigation should perhaps be serious default, whereas a different test might apply for something that goes wrong in the restraint proceedings. I tabled the amendments to get the discussion going. Once matters are clearer, perhaps we will be able to decide whether this section of the Bill requires substantial amendment.
 What is serious default as opposed to default? I would be grateful if the Minister would clarify that matter. Is it the test of, effectively, a malicious prosecution, or is it another test? That is another matter on which we need clarification. Until I have heard from the hon. Gentleman, it is difficult for me to develop further arguments and some of my arguments may not be justified. If the hon. Gentleman would respond and give us an impression of what the clause is designed to achieve, whom it is supposed to cover, what sort of compensation could be recovered under it, and what it would be granted for, we would be greatly enlightened.

John McWilliam: Order. It might have been better to have this debate under clause stand part.

Bob Ainsworth: The test for compensation under the existing legislation is serious default by the authorities. That is the position under the Criminal Justice Act 1988 and the Drug Trafficking Act 1994. The Government believe that the existing test should be retained, despite the fact that restraint will be available from an earlier stage in proceedings. That is fair and proportionate. Lowering the threshold for compensation would risk impeding the Bill's objective of enabling the wider use of restraint and compensation to recover the proceeds of crime.
 I shall deal separately with the amendments tabled by the hon. Member for Beaconsfield. Amendment No. 139 appears to be completely indefensible. It deals with those defendants against whom criminal proceedings are initiated but the proceedings do not result in a conviction or the conviction is subsequently overturned or quashed. The policy on compensation in such cases has been in place for many years and I am not aware of any evidence that it has given rise to injustice. We must be extremely careful to avoid introducing excessive financial risks to law enforcement and prosecuting authorities, which would be extremely effective in deterring them from doing their duty of enforcing the criminal law. It is inherent in criminal justice that a proportion of those against whom proceedings begin will end up not being prosecuted or convicted. There are already ample safeguards in criminal procedure to prevent criminal proceedings from being brought frivolously. 
 Moreover, the restraint and confiscation proceedings in the Bill contain ample safeguards. The defendant can apply to the Crown court to have the restraint order lifted. If that fails, he can appeal to the Court of Appeal. He can seek to have assets released for his reasonable living and business expenses. If that is refused, he can appeal. When a receiver is appointed, the Bill imposes a requirement to maintain the value of the assets. If the defendant disagrees with the actions taken by the receiver, he can apply to the court. If that fails, he can appeal. If property is irreplaceable, he can ask the court for a ruling to that effect, so that the receiver cannot dispose of it. Given those safeguards, there is no justification for the alteration proposed under amendment No. 139. It would cause real damage to the aim of making the confiscation system more effective. 
 Amendment No. 138 deals with suspects whose assets are restrained during a criminal investigation, but before a charge has been laid. I concede that Conservative Members have an arguable case, but it is misguided and potentially damaging. At present, those suspects who are not yet about to be charged with anything cannot have their assets restrained. Early restraint is therefore one of the major innovations under the Bill. Until the investigation has been completed, it is not known whether there are sufficient grounds to take criminal proceedings against such people. An investigation may be launched on the basis of suspicion and that suspicion may prove to be unfounded. For that group of people, therefore, it is suggested that the threshold of compensation should be reduced. Under the amendment, any error by the investigator, regardless of its seriousness, would expose the law enforcement to a compensation claim if the error prolonged the investigation, no matter how briefly. 
 All my arguments about amendment No. 139 apply to amendment No. 138. The Bill provides ample safeguards to persons affected by restraint orders, so that they can ask the court to protect their interests. Moreover, the purpose of bringing forward restraint is to address the problem that is at the centre of the current legislation, which is that assets are often untraceable, have been used up by the time that the suspect has been charged or have been put beyond the reach of the law enforcement agencies. 
 The hon. Member for Beaconsfield raised an important matter. I do not wish to diminish it. It goes right to the heart of what we are doing in Committee. Subsequently, we and the House must decide whether we understand and support the Government 's position, which is fundamentally that providing for effective early restraint is proportional. That test will be applied if the matter is challenged through the legal system. We believe that it is proportional. Without it, the measures under the Bill will be rendered massively ineffective. We ask the Committee to accept that the threshold is in the right place. It must be kept at that place if people want the provision to be effective so that the proceeds of crime can be confiscated.

Norman Baker: I apologise for having to pop out for 30 seconds or so in the middle of the Under-Secretary's contribution.
 In an intervention on the hon. Member for Beaconsfield, I made a point about subsection (6) and the category of people who would be eligible for compensation in the event of a serious default being proven or accepted—namely, those who had realisable property. My point was that malicious confiscation or people suffering in ways other than through the loss of realisable property were theoretically possible. What safeguards are provided for people in such circumstances?

Bob Ainsworth: Subsection (6) states that the third condition is that the person had realisable property or has suffered loss.

Norman Baker: And has suffered loss.

Bob Ainsworth: The hon. Gentleman is right. The provision states:
``and has suffered loss in consequence of anything done in relation to it by or in pursuance of an order''. 
We are not trying to define property narrowly. A person will have to have shown that he has suffered loss as a result of the activities of the law enforcement agency being brought against him.

Norman Baker: I prefer the Minister's slip, when he substituted ``or'' for ``and'', which was a much more satisfactory formulation. Will he amend the Bill accordingly?

Bob Ainsworth: I am not sure whether that would substantively change the existing wording. However, I will check it out and come back to the hon. Gentleman.
 The hon. Gentleman said that the matter is entirely outwith people's rights under the criminal law, but people who are pursued through the criminal law have no automatic, statutory right to compensation. Indeed, unlike restraint, arrest carries no statutory right to compensation and claimants must rely on case law. When compensation is requested for wrongful arrest, the standard that the courts apply is fairly high. The courts will generally consider only whether a police officer had reasonable cause for suspecting that a person had committed or was committing an offence for which he could be arrested. If the officer can show that he did, a claim for unlawful arrest is likely to fall. The measures that we propose are not, as the hon. Gentleman suggests, deeply different from those that apply in other circumstances relating to the criminal law.

Paul Stinchcombe: I am grateful for the Minister's clarification, which accords with my recollection of the law on damages for wrongful imprisonment. Subsection (1) states that the court may award
``such compensation as it believes is just.'' 
Does that give the court discretion to give less compensation than the amount of loss suffered if it thinks that the defendant brought the prosecution or proceedings on himself through his own behaviour?

Bob Ainsworth: My reading of subsection (1) is precisely that. It would be up to the court to decide what was just, which would not necessarily be the exact equivalent of the loss that had been incurred. In doing so, it would take into account the circumstances involved.
 The hon. Member for Beaconsfield has been working up to this and has referred to it in previous conversations. If we lower the threshold, we shall provide a considerable deterrent to law enforcement agencies against the use of early restraint. The amendment would render the measures next to useless. It would mean that we might as well not have them at all. If he wants the Bill to be effective, he should think seriously whether that is a line that should be pursued.

Dominic Grieve: I sense that the Minister may be coming to the end of his remarks. Will he deal with where the financial investigators' actions fit into the picture? The explanatory notes state:
 ``Clause 72 provides for compensation to be paid to a person whose property has been affected by the enforcement of the confiscation legislation.'' 
Therefore, I would expect that a financial investigator's actions that cause a serious default would be susceptible to compensation. As I discussed with the hon. Member for Wellingborough (Mr. Stinchcombe), I was not 100 per cent. sure where such actions fitted into the law enforcement agencies that are listed. Will the Minister clarify the matter?

Bob Ainsworth: The serious default case must be against those who pursued the case against the defendant. If the financial investigator investigated the size of the assets, he could not commit serious default. We are discussing not serious default cases against the director who conducts the investigation to confiscate assets and round up all that is potentially forfeit or against a financial investigator acting on behalf of the director, but against authorities that are shown to have been unjustifiable in their action against the defendant. If the defendant is acquitted, he is entitled to pursue compensation for serious default, which must be against the authorities that brought the action.

Dominic Grieve: I still lack clarity about the matter. Perhaps I lack understanding about the different role of a financial investigator used by the prosecutor and a financial investigator used by the director. In reality, perhaps the director employs the financial investigator only at the time of confiscation and not during the restraint proceedings of the criminal investigation. However, the fact that the financial investigator is not a member of a police force should not mean that if he commits a fault during his handling of the restraint proceedings that leads to loss and the defendant is subsequently acquitted, the exonerated defendant would not have the right to recover a sum beyond the mere repayment of the value seized. That is a critical issue. From the explanatory notes, I understood that the clause provided a compensation mechanism for a person in such a situation. If it does not, we need to know.

Bob Ainsworth: We are trying to provide compensation for people who should not have been subjected to restraint or confiscation. We are providing compensation not because there was an error in the assessment of the assets, but because the case should not have been brought. A person's entitlement to compensation must be triggered by proof of serious default by those who brought the action that led to the issue of the restraint order and the pursuit of a compensation order that caused the person's loss.

Dominic Grieve: I assume that the Minister has concluded his remarks. I continue to be anxious about the matter. May I give the Committee an example? Let us assume that the prosecutor wrongly prosecutes. A criminal investigation occurs and assets are restrained. The person is later acquitted and there is no question of him having a criminal lifestyle. He is entitled to recover his assets. Let us further assume that the prosecution was brought maliciously. In such circumstances, the defendant may be entitled to compensation for malicious prosecution. However, he may be handed back the full value of his assets and have no justification to claim compensation for the way in which they were seized because he has not lost a bean. Although the prosecutor might have committed serious default, after reading the explanatory notes and clause 72, I did not think that a compensation claim under the clause would be made at all because I understood the basis of the clause to be property that was affected by the enforcement of the confiscation legislation.

Bob Ainsworth: Is the hon. Gentleman asking for compensation to be considered where there has been no loss?

Dominic Grieve: No, quite the reverse. I was illustrating that there could be circumstances in which there was serious default in the conduct of the criminal investigation by a prosecutor but, at the end of the day, there was no financial loss. Although there may be an entitlement to compensation for malicious prosecution under separate provisions, that would not concern clause 72 which, according to the explanatory notes, is about
``compensation to be paid to a person whose property has been affected by the enforcement of the confiscation legislation.'' 
A further example relates to circumstances in which there is not an acquittal, but a conviction that is subsequently quashed on appeal. Again, it may turn out that the prosecution was brought wrongly, that there was malice and serious default and that material was concealed from the defence. However, if there was no loss of property and its value had not diminished, there would not be a claim under clause 72. I would not expect such a claim. 
 My worry concerns a second example. A prosecution may be brought that is, within the standards of malicious prosecutions, fairly conducted. Proper investigation will have occurred, but the defendant will be prosecuted and acquitted, or convicted with the conviction overturned on appeal—such things happen. In those circumstances, the police or other authorities stated in subsection (9) may not have committed default. However, during the prosecution, a restraining order may have been brought into operation. The person who carried that out—for the sake of this discussion—could have committed a serious default by concealing the value of an asset, undervaluing it deliberately, or committing an act that meant that when the amounts administered were returned to the defendant, they were greatly diminished. 
 Alternatively, the defendant could be convicted, in which case the asset realisation process would have occurred before the conviction was quashed on appeal. During that process, the financial investigator, who, I think, would have been appointed by the director, could commit a misfeasance by deliberately selling assets at an undervalue or tinkering around with the assets in a manner that was open to criticism. In such circumstances, it could be argued—this is why I seek clarity—that no member of the police force, the Crown Prosecution Service, the Serious Fraud Office, the commissioners of Customs and Excise or the commissioners of the Inland Revenue committed serious default. However, the financial investigator, who is either the creature of the director or the creature of the prosecutor, could have committed serious default. 
 When I first read clause 72, I expected that that contingency would be covered. Having listened to the Minister's comments, I am not reassured that that is the case, although I may have misunderstood him. However, I assume that it has to be because, if it were not, it is difficult to understand why the provisions under clause 72 are in the Bill at all, although there could be a default by the prosecuting authority and a default by the financial investigator that are wrapped up in one. The matter hinges on the relationship between the financial investigator and the director and the bodies specified under subsection (9). 
 I hope that the Minister will have the opportunity to return to my next question. I tabled an amendment that would replace the provision concerning costs from the agency with costs out of central funds. It was not selected for debate, but I tabled it because of my anxiety that, once the burden had been removed from ``serious default'' to ``default'', large amounts of money would be taken from the coffers of the police service. 
 Two arguments must be taken on board. First, it is good that law enforcement agencies should pay out of their own pockets when matters go wrong and that people are not deterred from bringing the confiscation and restraint proceedings in the first place. Secondly, if serious default does emerge, there is a tendency to conceal it because the person is afraid that substantial chunks of the allocation of money that he receives will be used to pay the compensation rather than the money coming from central funds. That second issue was linked in my mind to the removal of the word ``serious''. 
 Will the Minister explain where the financial investigators and the director fit in? Is it the case that under clause 72, in a criminal investigation, the director and financial investigator are immediately ancillary to those categories of individuals identified in subsection (9)? If they are not, they must be identified separately. Their serious default is more likely to cause loss to the defendant who is subsequently acquitted than the actual conduct of the prosecution and criminal investigation itself. That is my point.

Bob Ainsworth: I do not agree with the hon. Gentleman that the director and financial investigators should be identified separately. We are discussing criminal proceedings and he wants to protect the individual against risks that arise as a result of those proceedings. A person in such circumstances runs many risks. He may be put into custody, not just placed under a restraint order. When people are deprived of their liberty in such circumstances, ex gratia payments are the only redress open to them. The hon. Gentleman knows much more about how that system works than I do. A serious error or misdemeanour by the person who has been managing the individual's assets under the restraint would be a breach of care. Civil redress would then be open to that individual for compensation against the receiver. If there were not serious default by prosecuting agencies, compensation would not be paid under the clause.
 I am aware of the hon. Gentleman's other amendment. We guessed the reason for it, which was to allow early restraint to take place without there being a huge worry about the potential loss by the authority that is carrying out the investigation. As he recognises, the problem is that one breaks all accountability by accepting responsibility from central funds for that sort of activity. That would throw up a whole different set of problems. 
 I hope that I have made myself clear to the hon. Gentleman. He may be shocked by what I say; I do not know. The point that he thinks should be covered is not. There is redress in criminal cases for other things that befall such individuals. Exactly the same would apply in this regard. There is a duty of care on the person who takes charge of the defendant's assets while he is under restraint and, of course, that can be challenged in civil law.

Norman Baker: I seek clarification on subsection (6), which nags away in my brain. I made a point earlier about ``and'' or ``or'' in the second line, and the Minister kindly said that he would come back to me. I accept that that may not be today and, indeed, mature refection may be helpful. I should like clarification about what happens to property that is confiscated and subsequently returned if the value of that property has changed during the period in which it has been held.
 I would like to take the hon. Gentleman back to Second Reading, or certainly the beginning of the Bill, which is relevant to my point. I think that I asked him what would happen if someone gained, say, £100 from the proceeds of crime and they subsequently put it all on a horse and the horse came in at 50:1. Would the authorities try to secure £100 or—

John McWilliam: We dealt with that this morning. The hon. Gentleman should not proceed with his point.

Norman Baker: Of course, I accept your ruling, Mr. McWilliam. I was trying to make a helpful comparison with the point that I am about to make, with which I suspect that we have not dealt, but you can tell me if we have done so. If a person has an asset confiscated and in the intervening period between it being confiscated and—

John McWilliam: Order. We dealt with precisely that point this morning.

Paul Stinchcombe: Perhaps I may seek clarification from the Minister about some of my residual concerns, which are similar to those of the hon. Member for Beaconsfield, about how the clause would work and why it does not contain certain provisions. I can readily appreciate why the people who are identified in subsection (9) are identified. That flows directly from the conditions set out in the clause. However, that seems to leave room for injustice when a prosecution or investigation is rightly brought, restraint happens, but loss is occasioned thereafter because of further serious default later in the process. Why is that not covered by this statutory code, instead of being dealt with under other civil proceedings, given that we have the opportunity to put it in the code?
 Subsection (1) seems to help the Minister in that it would enable the court to reduce the compensation to a lower level in any event if the person's conduct brought those proceedings on his own head. Given that protection, would it not be worth revisiting the clause at a later stage, to consider whether other serious defaults in the process, which could lead to loss, might not also usefully be covered?

Bob Ainsworth: My hon. Friend refers to circumstances in which further serious default takes place at a later stage. Will he clarify some of the issues about which he is concerned and when and why that serious default might occur?

Paul Stinchcombe: If proceedings take place, reasonably and rationally—because there was just cause for a prosecution to be commenced—and restraint follows, default might occur in the handling of the goods thereafter, so that loss is occasioned. I appreciate, as my hon. Friend said earlier, that that could give rise to common law proceedings for damages and I also appreciate—at least I think I do—that there are routes within this statute for application to go to court to prevent certain goods being dealt with in certain ways. Apart from that, I wonder whether there is any room for serious default to take place when it is not also covered in a clause that bears that name.

Bob Ainsworth: I understand my hon. Friend's argument. He is zooming in on what he calls serious default that is committed by those who hold property on the defendant's behalf, which leads to a diminution of the value of that property. As I explained to the hon. Member for Beaconsfield, there is no provision for compensation for that.
 If serious default were occasioned, a breach of duty of care would most definitely have occurred, so the defendant would be capable of pursuing compensation through the courts. My hon. Friend would know about that better than I. He asks that we draw into the issue of serious default in criminal proceedings not only those who brought criminal proceedings but those who had a duty of care or who managed the assets during the process. I think that that is what he is saying.

Paul Stinchcombe: I am not asking for that, precisely. I ask that we consider, under this compensation provision, whether the Bill excludes provisions for compensation arising from other forms of serious default. I accept the Minister's point about other forms of common law action, but it is difficult to frame a course of action for seeking damages for breach of statutory duty if the opportunity to address that presents itself and is not taken.

Bob Ainsworth: This is a complicated matter. Let me reflect on the points made by my hon. Friend. We do not intend to punish those who are unreasonably pursued and experience serious default in the criminal system. Those people certainly should be compensated and the Bill allows that. Equally, we do not intend that the prosecution agencies should be placed in such financial jeopardy that they face a serious dilemma or do not use the powers that we are providing in the Bill. That is why the clause is written in that way.
 I shall reflect on my conversation with my hon. Friend and come back to the Committee on the subject, but I do not want to do anything that puts such a burden on the prosecution agencies and makes us unable to pursue the proceeds of crime. From his other interventions, I feel sure that he does not want that either.

Dominic Grieve: This has been a helpful and interesting discussion. I am grateful to the hon. Member for Wellingborough for his contribution.
 Some of what the Minister said about the principles of the clause is troubling. I need only look back at the restraint clauses, for example clause 43(2), to see that it is clear that during a prosecution, restraint proceedings can be brought at the request of the director or an accredited financial investigator. However, from what the hon. Gentleman said, it seems that Bill treats them as distinct and separate from the prosecuting authority. He explained that if anyone were in default because they occasioned a loss by restraining, handling or confiscating assets that subsequently had to be returned, the defendant would have to seek compensation through the ordinary civil procedure. 
 After I first read the clause, I consulted the notes to the Bill and they do not convey how limited the clause is in relation to the issue under discussion. That caused me to hesitate and to explore the matter. Had I understood the limitations of the clause, I would have tried to draft major amendments to bring the director and the financial investigators within its provisions. 
 I am not in a position to do that and I want the clause to survive, so I will not invite the Committee to vote against it. However, I will return to the matter on Report because I have identified a serious defect. Where the state is, understandably, taking such draconian action against an individual, and where the Crown court, as the Minister intends, will be fully seized of a matter, including the details of assets, it is wrong that a defendant who has lost out should subsequently have to go through a completely separate civil procedure process against the director and financial investigators. A statutory compensation system should be provided. I hope that the hon. Gentleman will forgive me for thinking that, perhaps, nobody thought things through and that the clause has reproduced the pre-existing structure, without taking account of the implications of the changes that the legislation will bring about. 
 I hope that, as the hon. Member for Wellingborough suggested, the Minister will reconsider the matter, so that he may be able to return on Report with a compensation structure that tackles the problem. I will not oppose the clause. 
 I turn to my amendments on default. In light of the Minister's remarks, I am satisfied that amendment No. 139 should not be put to the vote. I take on board his remarks about why the term ``serious default'' should remain in certain circumstances—they were the most cogent arguments that he put forward. However, with regard to restraint issues, ``serious default'' should be replaced by plain ``default''; that should be the standard in such cases. Therefore, I will be inviting the Committee to vote on amendment No. 138. I appreciate that the hon. Gentleman is unlikely to agree to accept it, but I am trying to highlight a problem that I have identified. 
 If the compensation regime is improved in the way that I think that it should be, amendment No. 138 may cease to be necessary. However, as matters stand, I intend to press that amendment and I urge the Minister to examine the compensation regime again because it is flawed. 
 Question put, That the amendment be made:—
The Committee divided: Ayes 3, Noes 13.

Question accordingly negatived. 
 Clause 72 ordered to stand part of the Bill. 
 Clauses 73 and 74 ordered to stand part of the Bill. 
Further consideration adjourned.—[Mrs. McGuire.] 
 Adjourned accordingly at twenty-five minutes to Five o'clock till Tuesday 4 December at half-past Ten o'clock.